For homeowners looking to save money and lower their carbon footprints, heat pumps are becoming more and more popular. This article explains how heat pumps work and what makes them so efficient for your home and your wallet. To make an even bigger difference with a heat pump, consider pairing it with rooftop solar — Panasonic has the resources and trusted installers you need to get started.
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If you haven’t heard of heat pumps, you will soon. Solar panels, batteries and electric cars have been on the scene for years now; heat pumps are the up-and-comer of the clean energy world.
They use electricity to both heat and cool buildings with stunning — some would say magical — efficiency. And they won major federal tax incentives in last year’s Inflation Reduction Act that amount to thousands of dollars in savings for each household that installs them.
But heat pumps require a more complex pitch than EVs or solar, with a more varied and obscure economic payoff. And the contractors who actually sell and install home heating often pooh-pooh heat pumps in favor of the fossil-fueled furnaces they’re accustomed to selling.
Canary Media has been tracking the technological evolution of heat pumps and the policies that encourage their adoption, and we’ve compiled that knowledge into this user’s guide, geared toward anyone considering the switch to highly efficient electric heating and cooling.
If you care about climate impacts, decarbonizing your space and water heating is one of the biggest carbon reductions you can control directly. Doing so could make your home more comfortable, thanks to the way heat pumps operate. And yes, it could save you money, though that depends a great deal on where you live and what kind of fuel you currently use for heating. Consequently, many heat-pump businesses emphasize the comfort factor.
When Oregon-based GreenSavers switched from selling furnaces to almost exclusively selling heat pumps around five years ago, “the word ‘electrification’ wasn’t even a thing we had heard of,” said Operations Manager Craig Aaker. “It was a comfort thing — this was going to work the best.”
There are heat pumps for controlling the temperature of your house and heat-pump water heaters — this guide focuses on the former. We hope these questions help you determine if a heat pump is right for you. And if we’re missing anything, let us know. Happy heating and cooling.
1. Do you own your home?
I’m a renter myself, so it’s a bummer to have to start here. But as with installing rooftop solar, you have a lot more options if you own your home.
That’s not to say you can’t figure something out for a rental. If you live in an apartment building, you can attempt to lobby management for an overhaul, but that’s largely out of your control.
Alternatively, renters can turn to small, mobile versions of heat pumps. A sleek forthcoming model from Gradient slides over the window frame, delivering electric heating and cooling without permanently altering the building (that product ships this spring, starting at $2,000). If the renter moves, they just take the little heat pump with them.
2. What’s your current heating and cooling source?
The systems you’re replacing will dictate what type of heat pump makes sense and how good a deal it is for you. Remember that you’re comparing it with both your heating system and your cooling system, because heat pumps do both (don’t let the name fool you).
As a general rule, the more expensive and polluting your heating source is currently, the more attractive heat pumps become. Startup Dandelion Energy, which drills underground to siphon energy from the earth for ground-source heat pumps, launched first in upstate New York to compete with sludgy fuel-oil heating.
Let's say you’re living in New England and shelling out big bucks to fill up a decades-old fuel oil furnace each winter, and you don’t have air conditioning but want it to deal with increasingly sweltering summers. That amounts to a strong economic case for heat-pump adoption: Instead of paying for the most expensive heating and paying extra for a new air conditioner, you can buy one appliance and do both more efficiently.
If, on the other hand, you just bought a new, efficient gas furnace and a new, efficient air conditioner, and you want to use the equipment you paid for until it reaches the end of its useful life, a heat pump will be a harder sell.
3. Are heat pumps a good fit for the climate where you live?
Contrary to a persistent myth, heat pumps can handle cold weather. In fact, the snowy state of Maine is a hotbed of heat pumpery (so is Poland, for that matter). But their efficiency does drop in extreme cold.
This means that the region you live in does matter for what type of heat pump you choose. If you’re in, say, coastal California or the Southeast and you’re mostly dealing with hot summer days and the rare chilly spell in winter, a less expensive model will fully meet your needs.
“In most markets in the U.S., you can get a heat pump and not need a backup,” Aaker said.
Cold-climate customers probably want to invest in souped-up models, like those with multistage compressors, also referred to as inverter-based systems. Products on the market today go down to -15 degrees Fahrenheit, said Panama Bartholomy, executive director of the Building Decarbonization Coalition. “The DOE’s Cold Climate Heat Pump Challenge is going to bring even more products to the market from even more manufacturers,” he added.
If you want extra assurance for super-low temperatures without relying on fossil fuels, you can install electric resistance heating around your heat pump. It’s not as energy-efficient, but it can give the heat pump the boost it needs in the most extreme cold.
Then again, ground-source heat pumps can always find some subterranean heat even when the air is frigid. Sara Schultz, an environmental activist who lives just north of Buffalo, New York, put her ground-source heat pump to the test during December’s historic blizzard. Even as 70 mph winds whipped the windchill into negative temperatures, “The whole time we had no problem; we had heat in the house and hot water,” she recounted.
4. What’s the best time to make the switch?
Conventional wisdom in the heating industry holds that nearly all furnace purchases happen when the old one breaks. Finding reputable data for this assertion is tricky, but there’s broad consensus that people rarely think about their heating equipment until it doesn't work right.
The problem, as far as heat pumps are concerned, is that it’s hard to get a same-day heat pump installation. Companies interviewed for this story said they couldn’t turn around heat pumps that quickly right now, due to factors including supply-chain constraints, shortage of trained workforce and being booked out far into the future.
The upshot is that if you want to install a heat pump, buy it when you don’t need it right away, rather than when you need one urgently. Shoulder months are good so you’re not competing with the emergency AC customers in the summer or frantic heating customers in the winter.
“Anytime you're thinking about buying an air conditioner, just buy a heat pump instead,” Aaker said.
And of course, you should consider your long-term plans — if you’re likely to move in a year or two, you won’t get to enjoy your investment for long. Then again, studies have found that heat pumps raise home values by more than the cost of installation.
5. Who should you hire to install the heat pump?
Heat pumps are a cutting-edge clean energy technology, but the way they reach customers is through local, often old-school contractors, who are not necessarily on board with the new approach.
Many contractors simply don’t want to sell heat pumps; even heat-pump experts interviewed for this story had to struggle to get contractors to sell them the technology for their own homes.
“The risk is, if you get a general contractor, they're going to do what makes the most sense for them,” said Lacey Tan, who researches building decarbonization at climate think tank RMI (Canary Media is an independent affiliate of RMI). “It’s going to be business-as-usual, it’s going to be what they trust. […] There is a price consumers are paying for [contractors’] fear.”
Part of this stems from the contractor business model. An efficient furnace installation team can be in and out in two hours, said Craig Aaker of GreenSavers. It can take even a highly skilled heat-pump installer at least a day to do the job.
Some contractors trust gas furnaces but heard decades ago that heat pumps didn’t work great.
“They weren’t that good 30 years ago,” Tan said. But times have changed: “Telling a contractor ‘I want a gas furnace’ is kind of like going to AT&T and saying, ‘Can I get a landline, though?’”
Some contractors reluctantly offer heat pumps but price them higher, such that gas furnaces look like the obvious better deal. Others will sell a heat pump, but with a gas furnace as “backup” for the extra cold days. You could end up buying a redundant system that you never really need.
“If you don't already have a contractor, reach out to your network and be very specific: Does anyone have a contractor recommendation for heat pumps?” Tan advised.
Consult lists of heat pump-savvy contractors, such as those who have completed Nate “The House Whisperer’s” HVAC 2.0 course. Some states fund programs for heat-pump and efficiency upgrades, and they maintain lists of contractors who participate. Your electric utility may be able to help you find someone too.
Expect to make at least a few calls before you find the right contractor. And as you would for any major purchase, shop around. Get quotes from multiple businesses and compare pricing and system sizes.
Lastly, you can also look to a small but growing cadre of national companies dedicated to heat-pump installation. Startups like Sealed and BlocPower launched with a mission to electrify buildings; they offer no-money-down financing and then connect customers with vetted local contractors to do the installation. If one of those companies operates in your area, you can trust that they won’t try to sidetrack you with lingering fossil-fuel preferences.
6. Will you need to overhaul your home electrical panel to add a heat pump?
Home electrical panels are a real pain to replace. Adding major electrical appliances such as heat pumps, induction stovetops and electric-vehicle chargers can necessitate panel upgrades to make your home capable of supplying greater flows of electricity. Panel upgrades can cost thousands of dollars and may require coordination with your utility to expand the flow of power from the grid to your house.
Absolutely ask your contractor whether your home’s electrical service can handle a heat pump. You don’t want to get caught unawares with that kind of upgrade bill.
Major service upgrades are more likely to be necessary for older houses that haven’t upgraded their wiring in years and now can’t handle an influx of electrical demand. But it depends on the house: If you were running inefficient electric resistance heating, a heat pump will suck up less power to keep you cozy, said GreenSavers founder Robert Hamerly. If the heat pump replaces gas, you’ll need to carve out additional space on your electrical panel.
If your wiring isn’t up to code, you’ll be making your home safer by fixing it. But that doesn’t make the process easier — or cheaper. Luckily, the Inflation Reduction Act created a tax credit for panel upgrades triggered by electrification projects, so now you can leverage some federal support to help cover those costs.
7. Can you claim tax incentives for your heat pump?
Yes, you can claim potentially thousands of dollars of tax incentives for heat pumps and home electrification, thanks to the Inflation Reduction Act that President Biden signed last year.
Here's a high-level overview of the tax credits and upfront discounts for heat-pump installation and other home electrification efforts that are available (Check out Canary Media’s run-through of the many home energy incentives for a more detailed look):
The Energy Efficient Home Improvement Credit offers 30 percent tax credits for heat pumps up to a cap of $2,000. It also includes up to $600 for electric panel upgrades and $1,200 for weatherization and insulation. There are some terms and conditions, but the credits do not have an income cap. That said, these being tax credits, they benefit people who have a tax burden to offset, and require waiting to file your taxes and having them processed by the IRS to actually feel the benefit.
A separate part of the law offers more immediate gratification. The High-Efficiency Electric Home Rebate Act, once fully enacted, will pay upfront incentives for low- and moderate-income households that want to electrify, including:
- Up to $8,000 for heat pumps
- Up to $1,600 for weatherization
- Up to $4,000 for electrical panel upgrades
- Up to $2,500 for electrical wiring
Households are capped at $14,000 in discounts from this program, but moderate-income families only get half the value of each discount. Advocacy group Rewiring America noted that customers also will be able to claim tax credits for eligible investments supported by these upfront discounts.
Another program funded by the Inflation Reduction Act, Hope for Homes, pays a rebate for home-efficiency upgrades based on how much they reduce energy consumption.
Are you overwhelmed by all these numbers? That’s totally understandable, because the Inflation Reduction Act created so many ways to save money on climate-friendly home upgrades. Luckily for you, it’s the job of the sales reps to parse all the options and guide you to the most favorable deal. Ask about these programs, plus any local or state incentives. If the contractor stares blankly in response, consider finding someone else.
8. Will a heat pump save you money on heating and cooling?
The cost-savings argument for heat pumps is a bit more complicated than for, say, rooftop solar or community solar, which should absolutely lower your power bill. Heat-pump savings depend on what you’re switching from, how much your electricity costs and what incentives you can access. And you’ll need to factor in upfront price as well as long-term operating costs.
Heat pumps typically cost more than a comparable furnace or air conditioner, so they’re a better deal if you need to replace both units at once. If you recently replaced both appliances with newer versions, it’ll make for some messy accounting to rip them out and buy a new heat pump. That said, all the incentives in the previous section bring down the sticker price.
Then there are the operating costs: That’s how much you’ll pay to use the heat pump over the years.
If you’re switching from old resistance heating to heat pumps, you should end up using a lot less electricity to heat your home, which yields monthly savings. And heat-pump vendors are giddy to compete with dirty and expensive fuel oil in the Northeast.
If you’re switching from cheap fossil gas to expensive electricity, the operational savings get trickier. It just so happens that many states pushing home electrification policies also have relatively pricey electricity — see California, New York, Massachusetts.
“You’re not going to sell this stuff on just the internal rate of return,” said Hamerly. “You are connecting with the individual’s heart that this is better for their house, better for their lifestyle, better for their community.”
Consumer financing also affects the pocketbook impact. A reasonably priced loan spreads out the payments; if the payments line up favorably with monthly energy bill savings, all the better.
9. Will a heat pump be noisy and annoying?
Sometimes heat pumps are noisy and annoying! I recently stayed at a house with a heat pump installed right outside the bedroom I was sleeping in, and it would crash and bang periodically throughout the night, shaking the wall and vibrating the bed.
It turns out that particular machine was part of the old guard of heat pumps, known as single speed. They cycle between off and on, which requires a surge of energy to swing back into action, hence the jarring sound. This also means they operate less efficiently.
Newer, better “variable-speed” heat pumps operate differently: they’re always on, but their design lets them dynamically adjust to the heating or cooling needs of the household in any given moment. That means they use just as much energy as is needed and run extremely quietly.
The takeaway: Not all heat pumps are created equal. Ask about noise and efficiency, and specify that you want variable-speed heat pumps — also known as heat pumps with inverter-driven compressors — and not the clunky, old-fashioned kind.
“The differential advantages of going to the higher-end products are definitely worth it,” Aaker said. “They’re uniformly quieter, they vibrate less, they’re always easier to live with.”
10. How will a heat pump make you feel?
This sounds subjective, but there are tangible ways that heat-pump heating feels different from furnace heating. Advocates and installers attest that it feels demonstrably better, but it’s important to know what to expect.
Furnaces don’t heat evenly. They cycle on, blast hot air for a few minutes, then turn off until the indoor temperature drops to the point that it triggers another cycle. The resulting temperature isn’t exactly what you set the thermostat at; it’s more of a sine curve, swinging above and below the desired level of heat.
Heat pumps, by contrast, can maintain a constant flow of tightly calibrated heat into your home. That means the air blowing into the room may well feel cooler than you are accustomed to — it’s not as hot as furnace heat. But it’s more constant, which produces a useful physical effect: Heat pumps coat internal walls in a layer of hot air that keeps out the external chill that would otherwise seep in through the building envelope.
Heat pumps also lend themselves to more tailored heating and cooling in individual rooms, which conventional heating and cooling have trouble providing.
Canary Media's Home of the Future series is supported by Sense.
Consumers need better tools to make their homes more efficient and to foster electrification. Sense technology is built on a simple, proven premise: Customers need real-time information to engage. With the first-of-its-kind Sense app, consumers can see exactly where and how to save energy in their homes. Sense works for utilities, for consumers and for the grid. Leading meter manufacturers are partnering with Sense to create consumer-ready smart meters that take home-energy management to the next level. Learn more.
This article was written by Julian Spector from Canary Media and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.
